SAO PAULO (Reuters) -Sweden's Maha Energy on Wednesday said it had acquired 5% of Brazilian oil firm 3R Petroleum and proposed a carve-out of its onshore oil assets, which would then be combined with a third company, PetroReconcavo.
In an open letter to 3R's board, Maha described PetroReconcavo as the "natural candidate" for the deal, as the firms operate neighboring fields in the states of Bahia and Rio Grande do Norte and would benefit from sharing infrastructure.
Under the proposal, 3R's onshore oil concessions, midstream and downstream assets would be combined with PetroReconcavo. 3R would remain listed and in control of its offshore assets, while its shareholders would receive shares in PetroReconcavo.
In the letter, Maha said it believes the market undervalues both companies and sees "enormous opportunities" to be captured by them.
"PetroReconcavo is poised to transform into a significant cash flow generator, and dividend payer, establishing itself with a distinctive position in the Brazilian oil and gas market," Maha said.
The combined company would have an output of 80,000 barrels of oil equivalent per day this year, it added.
3R declined to comment on the matter, while PetroReconcavo did not respond to requests for comment outside normal business hours.